Daryl Chillmaid v Patrick McInerney Transport

[2013] FWC 6311

[2013] FWC 6311

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Daryl Chillmaid
v
Patrick McInerney Transport
(U2012/11139)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 2 SEPTEMBER 2013

Application for Relief from Unfair Dismissal.

Introduction

[1] On 16 July 2012, an application pursuant to s.394 of the Fair Work Act 2009 (the Act) for a remedy for unfair dismissal was lodged by Daryl Chillmaid (the applicant)

[2] The employer response was filed on 30 July 2012.

[3] A telephone conciliation took place on 3 August 2012.

[4] Proposed hearings in October 2012 in Wodonga did not proceed.

[5] The matter was allocated to Commissioner McKenna to deal with non compliance with directions issued, who conducted a telephone hearing on 1 November and issued a decision on 16 November 2012 [2012] FWA 9572.

[6] Commissioner McKenna decided that there were exceptional circumstances relating to the applicant’s medical condition which justified an extension of time for the lodgement of the application being granted. An order extending time was issued in conjunction with the decision.

[7] Commissioner McKenna also determined that the respondent had not established a case that the application should be dismissed on the basis that it had no reasonable prospect of success, she therefore remitted the file back to the Unfair Dismissal Team for further programming. However, because of the prospect of certain allegations against the applicant being referred to the Wagga Wagga police, she recommended that further programming not take place until this matter was clarified.

[8] The applicant had represented himself and Mr P. McInerney also represented himself.

[9] The matter was listed before me in Sydney on 8 May 2013. The applicant appeared for himself but the respondent was now represented by Mr M. Staples, solicitor. The respondent and Mr Staples appeared by way of a telephone link from Wagga Wagga. I granted Mr Staples permission to appear pursuant to s.596 of the Fair Work Act 2009 (the Act).

[10] In the circumstances, and given the lack of substantive material filed, the hearing on 8 May was used as a preliminary hearing to try to clarify the issues.

[11] Formal directions were then issued but not complied with.

[12] Numerous attempts were made by my chambers to obtain the submissions and evidence in a proper form with only partial success.

[13] Ultimately, a telephone programming conference took place on 1 July which led to an agreement that the matter be heard in Canberra on 18 July 2013.

[14] Mr Staples appeared with Mr McInerney. The applicant represented himself with Ms L. Humphries.

[15] Written material was filed in the Fair Work Commission on a number of occasions by the applicant. The respondent filed a submission on 17 September 2012.

[16] With the agreement of the parties, the matter proceeded on 18 July in Canberra by way of a determinative conference.

Background

[17] The applicant was employed as a truck driver for the respondent from 15 November 2009 until his dismissal on 20 June 2012.

[18] The respondent had one truck and operated out of Wagga Wagga as a contractor to IRT, the principal of which was Mr Stephen Rinaldi.

[19] The applicant submits that he was unfairly dismissed and that procedural fairness was not provided to him.

[20] The applicant stated in his F2 form that on 20 June 2012, whilst he was in a doctor’s surgery in relation to a serious illness, the respondent took back the truck. When the applicant rang him, the respondent told him that he was going to sell the truck and therefore the applicant no longer had a job. He was given no notice and put off without payment of his entitlements. A range of documentation was tendered at the hearing verifying the applicant’s medical condition.

[21] The applicant claimed that he had been underpaid for weekends and public holidays worked and annual leave. He also claimed that the respondent had not paid him monies that had been agreed would be put into a separate account.

[22] The applicant denied that he had received warnings in 2011 and 2012 and asserted he had been verbally abused by Mr Rinaldi.

[23] The applicant denied that there was any issue with respect to credit card use.

[24] The applicant did not seek reinstatement but rather, compensation. There were many claims for unpaid wages (as noted above) but the claim for compensation for wages foregone because of the dismissal amounted to $1460.50 per week from 20 June 2012 to 1 July 2013 which amounted to $78,867.00.

[25] In his F3 Employer Response form, the respondent referred to allegations of credit card fraud, threats of violence against Mr Rinaldi and failure to follow instructions on a job in mid 2012. These led to verbal warnings.

[26] Another example mentioned by the respondent was the applicant not completing a job in March 2011.

[27] On 20 June 2012, the respondent said that he could not contact the applicant. He saw the truck in the street and took it back. He told the applicant that “he was no longer employed with us”.

Protection from Unfair Dismissal

[28] An order for reinstatement or compensation may only be issued where I am satisfied the applicant was protected from unfair dismissal at the time of the dismissal.

[29] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[30] There is no dispute, and I am satisfied, the applicant has completed the minimum employment period, is covered by a modern award, and is below the high income threshold with an annual salary of $71,465 for the 2011/2012 financial year. Consequently, I am satisfied the applicant was protected from unfair dismissal.

Was the dismissal unfair?

[31] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“385 What is an unfair dismissal?

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Was the Applicant dismissed?

[32] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for purposes of Part 3–2 of the Act. Section 386 of the Act provides that:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[33] Mr Staples, for the respondent, submitted that the applicant had effectively abandoned his employment because he took the truck without telling his employer.

[34] I find, however, that there was a flexible work relationship. Indeed, the evidence is that for some time the relationship between the applicant and the respondent was quite close. For example, the respondent provided the applicant with accommodation when he moved to Wagga Wagga.

[35] I am satisfied that on 20 June 2012 the applicant had done some work with the truck then had gone to the doctor in relation to a serious medical condition. He had not abandoned his employment. The evidence of both sides was that the respondent took the truck back and then told the applicant on the phone that he no longer had a job. I am satisfied therefore that the applicant was dismissed.

[36] The respondent had only one employee, but no reliance was placed on the Small Business Fair Dismissal Code (the Code), except by Mr Staples, towards the end of the Canberra hearing. I find that no case was made out that “the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal” in accordance with the Code.

[37] There was no argument that the applicant’s was a case of genuine redundancy pursuant to s.385(d) of the Act.

Harsh, unjust or unreasonable

[38] Having dealt with each of s.385(a),(c)-(d) of the Act, I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

[39] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd[1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

.... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.

[40] The applicant submits the dismissal was harsh, unjust or unreasonable because:

● He was dismissed by phone, without warning, when he was receiving treatment for a serious medical condition.

● He denies receiving previous warnings and has alternative explanations for the incidents in 2011 and 2012 that the respondent refers to.

[41] The respondent submits the dismissal was not harsh unjust or unreasonable because:

● On 20 June 2012 the applicant had not told his employer of the medical appointment.

● Previous incidents had led to complaints by clients and verbal warnings.

● There had been difficulties in contacting the applicant on previous occasions and with him not carrying out directions.

[42] I am under a duty to consider each of these criteria in reaching my conclusion, Sayer v Melsteel[2011] FWAFB 7498.

[43] I will now consider each of the criteria contained in s.387 of the Act separately.

Valid Reason - s.387(a)

[44] The respondent must have a valid reason for the dismissal which should be “sound, defensible and well founded” and should not be “capricious, fanciful, spiteful or prejudiced” Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. The applicant was dismissed because of his alleged serious misconduct on 20 June 2012 and previous performance issues. However, I am not satisfied that the evidence substantiates this for the following reasons:

● Although the evidence on both sides was pretty scant, I find that the applicant was bona fide attending a medical appointment for a serious illness.

● Given the usual practice, his use of the truck on that occasion was not inappropriate.

● The evidence did not establish that the 2011 and 2012 incidents were sufficient to justify dismissal. Certainly no written warnings were given.

● No further reliance was placed on the original allegations of credit card theft.

[45] I find that there was not a valid reason for the dismissal.

Notification of the Valid Reason - s.387(b)

[46] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] in explicit terms, Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 and in plain and clear terms, Presvisic v Australian Quarantine Inspection Services Print Q3730. In Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”    Ibid at 151.

[47] There was no dispute that the respondent took the truck back and told the applicant on the phone that he no longer had a job. I am satisfied that the applicant was not notified of the reason for dismissal.

Opportunity to Respond - s.387(c)

[48] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality RMIT v Asher (2010) 194 IR 1, 14-15.

[49] Clearly, in the circumstances, the applicant had no opportunity to respond to the reason for the dismissal.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[50] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[51] No discussions took place so that this issue does not arise.

Warnings regarding unsatisfactory performance - s.387(e)

[52] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employer about the unsatisfactory performance before the dismissal. Unsatisfactory performance is more likely to relate to an employee’s capacity than their conduct, Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

[53] There was evidence of previous verbal warnings which were disputed by the applicant. There was correspondence in evidence from a client expressing dissatisfaction with the applicant. However, even if there was substance in this complaint, I find that the respondent did not warn the applicant of his alleged unsatisfactory performance before the dismissal. Certainly there was no clear articulation of the consequences being likely dismissal.

Impact of the size of the Respondent on procedures followed - s.387(f)

[54] There is no doubt that the size of the respondent’s enterprise did impact on the procedures followed to effect the dismissal.

[55] No structured process was followed by the respondent. This is not surprising given the one truck operation. Indeed, the case appeared to arise from a previously close personal relationship that went wrong.

[56] I find the size of the respondent’s enterprise did impact on the procedures followed in effecting the dismissal.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[57] There is no doubt that the absence of dedicated human resource management or expertise in the respondent’s enterprise impacted on the procedures followed in effecting the dismissal. Of course, this issue is closely related to the size of the business.

[58] Proper human resource management would have identified any problems with the applicant’s work, counselled him, provided additional training if necessary and recorded the whole process.

[59] I find the absence of any such management or expertise did impact on the procedures followed by the respondent in effecting the dismissal.

Conclusion

[60] Having considered each of the matters specified in s.387, I am satisfied the dismissal of the applicant was harsh, unjust or unreasonable. Accordingly, I find the applicant’s dismissal was unfair.

Remedy

[61] Section 390 of the Act sets out the circumstances in which I may make an order for reinstatement or compensation:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

[62] I have already dealt with the issues at s.390(1)(a)–(b) above. I am satisfied the applicant was protected from unfair dismissal pursuant to s.382 of the Act and the applicant was dismissed unfairly. Accordingly, I am required to determine whether to order the reinstatement of the applicant or, in circumstances where reinstatement is inappropriate, an order for compensation if I am satisfied such an order is appropriate in all the circumstances.

[63] The applicant does not seek reinstatement but rather compensation. He acknowledged that the relationship had clearly broken down.

Compensation

[64] Section 390(3)(b) provides that I may only issue an order for compensation to the applicant if it is appropriate in all the circumstances.

[65] I have found that the applicant has been unfairly dismissed. He is a man in his fifties, with serious medical issues who has been unable to find employment since the dismissal. He has moved from Wagga Wagga to the New South Wales South Coast.

[66] I am satisfied that an order for compensation is appropriate in all the circumstances of this case.

[67] Section 392 of the Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered provides:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[68] The method for calculating compensation under s.392 of the Act was recently dealt with by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge,[2013] FWCFB 431 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket, (1998) 88 IR 21 and Ellawala v Australian Postal Corporation, Print S5109 (Ellawala). I have adopted the methodology utilised in Bowden in determining the amount of a payment of compensation.

[69] I will now consider each of the criteria in s.392 of the Act.

Remuneration that would have been received: s.392(2)(c)

[70] A lot of material on earnings and payments was tabled by the applicant. Most of it related to a possible claim for underpayment and/or was difficult to verify. It was agreed, however, that the applicant’s earnings for 2011 - 2012 was $71,465. I take this figure to be his remuneration at the date of dismissal.

[71] I now determine the period of time the applicant would have remained employed by the respondent, or would have likely remained employed with the respondent, had he not been dismissed.

[72] Apart from his medical problems, there is no reason to believe the applicant would not have continued in ongoing employment. Clearly, there has been a delay in this matter being finalised which was especially due to the applicant’s unavailability at various times.

[73] In the circumstances, I think that six months earnings is reasonable. I therefore determine the amount the applicant would have received is $35,733.

Remuneration earned - s.392(2)(e)

[74] The uncontested evidence was that the applicant had not had employment since the dismissal and therefore there has been no remuneration earned during the period since the dismissal.

Income likely to be earned

[75] Based on the applicant’s age and health, I find that it is not reasonably likely the applicant will earn income during the period between the making of the order for compensation and the actual compensation.

Other matters - s.392(2)(g)

[76] I have only taken the specifically referred to matters into account.

Viability - s.392(2)(a)

[77] Given the size of the respondent’s business, I am concerned about the effect of an order on the viability of the business.

Length of Service - s.392(2)(b)

[78] The applicant had almost two and a half years service with the respondent.

[79] I find that the applicant’s period of service with the respondent should not affect the amount of compensation that would be otherwise ordered.

Mitigating efforts: s.392(2)(b)

[80] In considering whether the applicant has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether the applicant acted reasonably in the circumstances, (Ellawala).

[81] The applicant testified that he had made every effort to seek alternative employment and as to his medical condition.

[82] I find that the applicant has made efforts to mitigate his loss suffered as a result of the dismissal.

Misconduct: s.392(3)

[83] Although I have found that the applicant’s past performance was not a ground for dismissal, I do find that he was not as diligent as he should have been in contacting his employer and carrying out instructions.

[84] I propose to reduce the proposed compensation for this factor and s.392(2)(a) (viability of business) to $20,000.

Shock, Distress: s.392(4)

[85] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[86] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the applicant, or to which the applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or half the amount of the high income threshold immediately prior to the dismissal.

[87] The high income threshold component immediately prior to the dismissal was $61,650.

[88] The amount the applicant would have earned, or to which the applicant was entitled, for the 26 week period immediately prior to the dismissal was approximately $35,733.

[89] The amount of compensation I will order does not exceed the compensation cap.

Conclusion

[90] I am satisfied that the applicant was protected from unfair dismissal, and that the dismissal was unfair and a remedy of compensation is appropriate.

[91] An order will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

D. Chillmaid, applicant on his own behalf with L. Humphries.

M. Staples, solicitor for the respondent with P. McInerney.

Hearing details:

2013

Sydney:

May 8, hearing by telephone.

July 1, programming.

Canberra:

July 18.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR540955>